Alphabet Eyeing 5% Swing as Q1 Revenue Hits $106.97 Billion
Morningstar says software stocks are at their most undervalued level in three years, highlighting Microsoft, Salesforce and Alphabet for AI integration strengths. Options pricing signals Alphabet shares could move up to 5% around its Q1 report, as revenue is forecast at $106.97 billion with EPS of $2.73.
1. Software Sector Valuation and Morningstar View
Morningstar highlights that software stocks trade at the lowest valuation in three years, with price/fair value ratios well below long-term averages. Microsoft, Salesforce and Alphabet stand out for robust AI integration plans, strong free cash flow and discounted valuation multiples compared with the broader sector.
2. Earnings Expectations and Options Pricing
Options markets imply Alphabet shares could swing as much as 5% by week’s end around its first-quarter earnings report, with potential highs near $362 and lows near $327. Estimated revenue stands at about $106.97 billion, a 19% year-over-year increase, while EPS may dip to $2.73 due to elevated AI investments.
3. Analyst Sentiment and Price Targets
Analysts maintain bullish sentiment, with 12 of 14 calling Alphabet a buy and an average price target of $382, indicating roughly 11% upside. Key catalysts include engagement metrics for Gemini AI features, advertising revenue trends and Google Cloud demand.